The Bank of England's financial policy committee has reached crunch time. Set up by George Osborne to prevent asset bubbles from derailing the economy, the state of Britain's housing market provides the FPC with an early test of its mettle. On Thursday it will reveal the concerns aired by its members at their quarterly meeting last week and publish their action plan.

Doing nothing is not an option. Sure, there has been an easing in activity in the past couple of months, but it would be a mistake to see this as anything other than temporary, caused in part by the reluctance of sellers to put their homes on the market; in part by tougher checks by lenders on the financial viability of borrowers; and in part by potential buyers taking a good hard look at whether they want to pay the sort of prices currently being asked.

The FPC should look through these temporary factors and focus on the underlying picture. While this shows that, as yet, bubble conditions only really apply in London – where prices are already 25% up on their pre-recession peak (and 55% higher in central London) – there are plenty of warning signs flashing.

These include the tendency for property booms to ripple out from the capital, the expectation that prices will keep on rising, the increase in the number of high loan-to-value mortgages agreed in the past year and the fact that house prices began this cycle at a relatively high level.

Stir in rising consumer confidence and falling unemployment and all the ingredients are there for the housing market recovery to enter a second phase in the next couple of months. Activity and prices are likely to rise.

So what does the FPC do about all this? First, it has to decide whether the housing market currently poses a systemic risk to financial stability. With banks holding more capital than they did and interest rates low, the answer is no, at least for now.

Second, it has to decide whether London is typical of the whole country. Again, the answer is no. House prices in parts of the country furthest from London are still a long way below where they were before the recession began in 2008.

Third, the FPC has to consider whether a future bout of rapid house-price inflation could be destabilising. Britain's history over the past 40 years, coupled with the fact that property already looks expensive, suggests the answer to this question is yes.

Finally, then, the issue is what the FPC decides to do about it. Mark Carney, the Bank's governor, has made it clear that he thinks the underlying problem with the property market is that not enough houses are being built, and that is something Threadneedle Street can do nothing about.

But the Bank does have a range of powers it can use to moderate demand. It has the power of rhetoric, and this should not be underestimated, particularly since the FPC can warn that if the boom gets out of hand its sister body, the monetary policy committee, will have no choice but to put up interest rates.

But there are more direct ways the FPC can make its mark. It can toughen up the amount of capital that banks have to hold against high loan-to-value mortgages. It could suggest that other lenders follow the example of RBS and Lloyds and announce that they will not lend more than four times the income of a borrower on loans in excess of £500,000. And it could toughen up the terms of the mortgage market review, under which lenders have to be sure that borrowers can live with mortgage rates much higher than they are today. At the moment, the benchmark is 7%. Raising that to 8% would not just limit the number of first-time buyer loans: it would be a statement of intent.

Green sees red?

Were Sir Philip Green to find that one of his Topshop staff had mistakenly put £2 products on sale for 2p each, you imagine that he would hit the roof. So you can probably picture his immediate reaction when the Australian online fashion discounter MySale, in which he holds a 22% stake, fumbled its stock market debut last week.

Thanks to an error by one of its brokers the shares were listed on the first day not in the correct form of 226p, but at £2.26 instead. Some automated trading systems in the City interpreted that figure as 2.26p, thus beginning a selloff of the shares at discount prices.

At one point the shares were down by around 27%, and even though a statement trying to clarify the situation was rushed out, the error in pricing was not corrected until the next day.

Green was sanguine about the affair, at least in public. He said the mistake was annoying, "but what can you do?". In private, he was probably a little less relaxed, since the episode took some of the shine off his return to the stock market.

And investors who may have seen their MySale shares unexpectedly sold off on the cheap are unlikely to be particularly happy either, especially as Sir Philip's chum Mike Ashley later rode in to give some support by buying a 4.8% stake in the business. US fund manager Fidelity was also keen, snapping up just over 6% later in the week.

The London Stock Exchange said it had monitored the early dealings in MySale but had found no signs of a disorderly market. No sales were apparently made at the ludicrously low prices, even though the error must surely have contributed to the initial falls.

So the trades involved are unlikely to be cancelled despite the confusion. Less caveat emptor, more caveat venditor, it seems. But would it be a surprise if some eagle-eyed lawyer took a look at the situation?

Grocer's imitation game

There is a seismic shift going on in the grocery business: trips to huge out-of-town superstores are out, while online, local and discount shopping are in. The big four grocers, as a result, are haemorrhaging customers, who are saving money and time going to Aldi, Lidl etc. On Friday, Sainsbury's announced it was going 50-50 with Scandinavian discounter Netto to bring its stores back to Britain (Netto was here before, but sold out to Asda), starting in Yorkshire.

This is either (a) a stroke of genius by Sainsbury's incoming boss Mike Coupe, which will give the grocer access to shoppers it doesn't currently reach; or (b) a panic move which will only further damage the main Sainsbury business. HSBC analyst David McCarthy says the answer lies across the Channel. French hypermarkets, he says, had the same problem. They, too, tried to imitate discounters with their own chains – but now realise the only effective response is to slash their own prices. He probably has a point.